No Quick Fix for HTC

If the latest earnings report from Taiwanese smartphone maker HTC is any indication of the company’s future success in smartphones, the answer is pretty clear.

HTC

HTC’s Windows-based smartphone, 8X

Investors dumped shares of HTC Tuesday, after the company said its third-quarter net profit slumped 79% from a year earlier. Shares in the Taiwanese smartphone maker fell by their daily limit of 7% as investors remained concerned about HTC’s challenging outlook for the rest of the year amid intensifying competition.

HTC, which has continued to lose ground against Apple and Samsung in the smartphone market, is counting on new Windows-based phones to regain its momentum during the holiday season.

HTC’s share of the smartphone market has slipped to 5.7% in the second quarter, compared with 10.7% a year earlier, according to data from market research firm IDC.

HTC’s latest Windows phones called HTC 8X and 8S will be available in November, though pricing is still unknown. HTC said the phones will be available across 150 mobile operators in 50 countries. In the U.S., they’ll be available through carriers T-Mobile AT&T and Verizon. Both the 8X and 8S are available in a variety of colors, including blue, black, red and yellow.

The phones don’t have any ground-breaking features, though HTC notes that the 8X features an ultra-wide-angle front camera lens.

“HTC’s Windows phones lack outstanding and exclusive features. The device is less attractive among the high-end phone models,” said Charles Hung, an analyst at Masterlink Securities.

“We expect Nokia to continue to enjoy 80% of the (Windows phone) market given Nokia’s bet on Windows phone and its close alliance with Microsoft,” said Mr. Hung.

Though HTC and Microsoft executives tout the user-friendly simplicity of the smart phones, Microsoft’s operating system represents a tiny sliver of the world-wide mobile device market. Its market share was just 2.7% at the end of the second quarter, according to research firm Gartner, far below Android’s 64.1% and 18.8% for Apple’s iOS.

Microsoft and Nokia have a broad alliance that allows the Finnish handset maker to use Windows as the dominant operating system in its smartphones.

HTC said in an emailed statement it is optimistic that consumers will embrace the Windows phones when they ship in November.